Tuesday, May 19, 2009

10 Tips for Starting a Business

I’ve started 5 businesses in the last 15 years. The first one didn't turn out so well, but the others have been successful. I’ve made a lot of mistakes during that time. Fortunately, none of the mistakes have (yet) been catastrophic. Here is a collection of some of the things I’ve learned the hard way. Please feel free to send me your thoughts. I’m especially curious to hear where your experience is different than mine.

Don’t spend too much money. That seems blatantly obvious, but I can’t tell you how many companies I have seen do fundamentally ridiculous things. Early on you should scrutinize every expense and ask whether it is really necessary.

Don’t go broke. The first step to success in business is staying in business. Make sure you have plenty of cash reserves. In my experience, it always takes more than you think.

Start small. You can always add more people, equipment, etc. as the business grows.

Listen to your customers. They will tell you what direction to go. I don’t necessarily mean ask them directly, as they might have their own agendas. But their actions (and their dollars) speak loudly about what you should be doing.

Combine tips 3 and 4. As you grow, adapt your business to what your customers want.

Focus on your competitive strengths. I would rather be #1 in one or two categories than be #5 in ten categories.

Whatever your strength, drive it home in the mind of your customers. You are generally better off reinforcing a strength than trying to overcome a weakness.

Advertise to get the word out, then let your customers do your advertising for you. Have you ever noticed how the very best businesses, especially small businesses, do very little advertising. They don’t need to advertise, because their customers are telling everyone else about their products.

Put your ego aside and treat customers the way you want to be treated. Most customers aren’t out to cheat you. If they are complaining about something, do your best to fix it, even if it is their fault.

Start!!! That’s the hardest part – taking the plunge. Beyond that, you can plug numbers into a spreadsheet all day, but you won’t know if it will really work until you try.